KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) will be reviewing its capital expenditure (capex) allocation of RM300 billion, following the decline in global crude oil prices.

“It will be changed because we want to be more effective ... in our cost management,” said Petronas executive vice-president Datuk Wee Yiaw Hin.

“We don’t know yet [if the capex figure will remain at RM300 billion], but we will review it in the light of [current] oil prices,” he said at a media briefing on the upcoming Eighth International Petroleum Technology Conference (IPTC) yesterday.

In 2012, the national oil company announced a RM300 billion capex programme spanning five years, not including mergers and acquisitions. It had been reported earlier that Petronas was looking at cutting its capex for 2015, although it is not clear by how much.

Nevertheless, Wee said there will not be a reduction in Petronas’ exploration and production (E&P) programme, despite rising costs.

“The E&P business is a long-term one, so the volatility of oil prices is something we need to manage. If the current low oil price continues for a year or two, we will have to look at how to optimise costs so that we can actually generate more cash for us to invest during this period,” he said.

The price of Brent crude oil average fell to US$79 (RM263.86) a barrel yesterday.

Wee declined to comment on his outlook for oil prices, saying “we cannot focus on the volatility. Instead, we need to look at how we can be as efficient as possible”.

On the group’s enhanced oil recovery programme (EOR), Wee said gaining new technology to drive production is key.

“As the fields get smaller, it requires more work to get to the oil and the costs increase, so it is in these fields that we need to look for new technology and innovation,” he said.

Wee said the group aims to increase the recovery factor for the EOR programme to an average of 45% to 50%, from the current 35% to 36%, translating into a total of an additional 500 to 800 million barrels of oil over the duration of the programme.

Meanwhile, the IPTC, which is hosted by Petronas and co-hosted by Shell and Schlumberger, will be held at the Kuala Lumpur Convention Centre from Dec 10 to 12.

The theme of this year’s conference is “Innovation and Collaboration: Keys to Affordable Energy”, and is expected to draw over 8,000 participants.

This article first appeared in The Edge Financial Daily, on November 18, 2014.